Gender pay gap reporting is a legal requirement for all UK organisations with 250 employees or more. Private and voluntary sector organisations have the option of including a narrative statement and action plan alongside their gender pay gap figures, outlining the reasons behind them and the actions they are taking to close the gap.
Coronavirus (COVID-19): the Government has announced a suspension of enforcement measures on gender pay gap reporting for 2019/20 in view of the unprecedented pressures businesses are currently experiencing.
This factsheet explains what the regulations are, what a gender pay gap report is, how to calculate the figures, and what benefits an organisation can derive from completing one. It shows why HR should be involved in compiling a gender pay gap narrative report, and explains the role the CIPD has taken in helping to shape this new reporting responsibility. It also covers possible enforcement measures that may be taken in the future.
What is gender pay gap reporting?
Organisations in the UK with 250 or more employees are required to calculate and publish statistics on the pay gap between their male and female employees, measured by hourly pay and bonuses, and on the proportion of male and female employees in each pay quartile (see below for the legal position). But this isn’t just about reporting a set of figures. The intention is to produce a sea-change in the way organisations respond to gender pay inequality and to encourage them to take action to narrow the pay gap over a period of time.
Although not obligatory, the government expects the majority of employers to include a narrative report alongside their gender pay gap figures (see below).
The UK’s gender pay gap reflects the labour market as a whole and there’s still a significant gap as shown by official statistics. The reasons for a gender pay gap are many and complex, both internal to an organisation as reflected in its policies, or external such as regional variation in the labour market or access to childcare. It includes historical notions about men being the ‘breadwinner’ in a family, higher value being given to jobs requiring traditionally ‘male’ qualities, the concentration of women in certain jobs and part-time roles, women missing out on promotion opportunities due to maternity leave, the availability of bonuses and overtime, career guidance, childcare requirements, and the impact of COVID-19 on work practices and employment.
A gender pay gap doesn't necessarily indicate unequal pay within an organisation. Male and female employees have a contractual right to be paid equally for performing equal work, and employers do not have to report on equal pay.
Listen to our gender pay gap reporting podcast.
What is narrative reporting?
Organisations must publish their gender pay gap annually, based on data collected on the same date each year, accompanied by a signed statement verifying its accuracy. Private and voluntary sector organisations can also include a narrative report explaining the context and causes of their gender pay gap, both from an organisational and a wider labour market perspective, the actions being taken to close the gap, and how employees will be involved in this process. The narrative could also explain any anomalies for that particular year, such as changes in the timing of bonus payments.
A narrative doesn't have to be lengthy (500-750 words will do) and doesn’t need to include all an organisation’s diversity and inclusion policies – only those that are relevant to closing the gap. It’s helpful to set out what actions the organisation is taking to narrow the gap over what time period, so that future narratives can report on progress made on this. Organisations that have had a significant gap for a long time may want to focus on what resources are being allocated to closing it and what progress they expect to make in the short term .
The narrative could cover a range of issues, including:
- The main drivers behind the reward strategy (for example, economic climate, organisational performance/budgets).
- An explanation of the purpose behind any bonus schemes (for example, rewarding good performance) and reasons why bonuses may be lower among women (for example, because of the distribution of part-time work among the workforce).
- The reasons for an under- or over-representation of women in certain roles and at certain levels of seniority (for example, labour market and societal factors).
- A statement of the organisation’s commitment to fairness and gender equality, and to addressing any barriers to opportunity that may be contributing to its gender pay gap.
Why should HR professionals be involved in writing the statement?
Men and women expect to be treated equally at work, and this includes closing the gender pay gap. Organisations that fail to do this, fail to maximise women’s contribution and sooner or later will acquire a reputation as a poor employer. Businesses that are diverse, measured both by gender and other characteristics, are more productive and make better financial returns.
HR professionals already know that what gets measured, gets managed. Understanding why a gender pay gap exists can take time, but the process of unpicking the factors involved will put businesses in a stronger position to tackle them, and help build an effective action plan to reduce the gap. A thought-through narrative can turn an ‘uncomfortable truth’ into a real opportunity to demonstrate an organisation’s commitment to closing the gender pay gap, and provide the starting point for addressing the issues that have led to the gap’s existence.
What organisations gain from narrative reporting
Simply because an organisation has a larger gender pay gap doesn’t mean it is a ‘bad’ employer. Employers’ non-pay benefits, such as pension contributions, vary, so rankings on the basis of pay alone may not accurately reflect total reward relativities. Organisations that promote diversity by using inclusive practices may yet report a relatively large gender pay gap due to their particular sector, or type of work, or the local labour supply. Conversely, employers that don’t have particularly inclusive work practices may report a relatively low gender pay gap.
A narrative can help an organisation contextualise its gender pay gap data and develop appropriate remedial actions. Transparency is a crucial first step but considered in isolation, an employer’s gender pay gap data still only provides a superficial overview of what is happening to men and women’s pay in that organisation. It does little to help understand why it is happening. Understanding the underlying causes of a gender pay gap goes beyond how women and men are paid. Businesses need to know how their working practices, and possibly culture, negatively affect women’s employment prospects and opportunities for progression.
An action plan can showcase measures for tackling the gender pay gap. A positive statement of intent will help businesses attract and retain employees, engage with other stakeholders, and build reputation and brand. It might include, for example, a recruitment and selection approach tailored to redress an under-representation of women in more senior roles, or describe how an organisation is opening up flexible working arrangements, not only for less senior and lower paid roles, but the most senior positions too.
The legal position
The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 require private and voluntary sector employers with 250 or more employees in the UK to report their gender pay gap, based on pay data captured at 5 April each year (the ‘snapshot' date).
Similar reporting requirements apply to public authorities, including government departments, the armed forces, local authorities, and schools. The ‘snapshot' date is 31 March each year.
The gender pay gap report must contain:
- The difference between the mean and median hourly pay rates and bonuses of male and female employees.
- The proportion of male and female employees receiving bonuses in each pay quartile.
The report must be published on the organisation’s own website, and on the government’s gender pay gap reporting website, within a year of the snapshot date, along with a signed statement from a director, or someone of equivalent authority, confirming its accuracy.
Employers have the option of including a narrative report, explaining why the pay gap exists, and an action plan for closing it.
How the regulations are enforced
Not filing a report breaches the Equality Act 2010, and could prompt enforcement action by the Equality and Human Rights Commission (EHRC).
In August 2018, a Business, Energy, and Industrial Strategy parliamentary committee report recommended giving the EHRC powers to levy fines for non-compliance, and extending the reporting requirement to companies with 50 or more employees by 2020. It also suggested making narrative reports and action plans compulsory, and adding partners’ salaries to the pay gap calculation. The government said in September 2018 it would not take up the proposals, but would review the regulations in five years’ time.
How has the CIPD responded to gender pay gap reporting?
We’ve helped shape the gender pay gap regulations since the initial consultation on them in 2015, emphasising that how government and businesses act on their data is just as important as collecting and reporting on the figures themselves. We’ve subsequently worked with government on employer guidance for closing the gap.
At a national level, statistics show wide variations in the gender pay gap across sectors, and we’ve argued that not explaining the factors behind this – such as occupational segregation, and early career choices among women – could actually deter women from exploring opportunities in science and engineering and other sectors striving to correct an inherent gender imbalance.
At an organisational level, HR should look at how their people practices – on recruitment and selection, learning and development, diversity and inclusion – influence their gender pay gap. This will help create a compelling narrative for their stakeholders that explains both the factors behind any gap and their proposed actions to support sustainable change.
We published our own third gender pay gap report in November 2019.
Our Guide on gender pay gap explains how to measure, report, communicate, and begin tackling a gender pay gap.
Useful contacts and further reading
Books and reports
ACAS and GOVERNMENT EQUALITITES OFFICE. (2017) Gender pay gap reporting: make your calculations.
HOUSE OF COMMONS LIBRARY. (2018) The gender pay gap. Briefing paper.
ONS DIGITAL. (2017) How do the jobs men and women do affect the gender pay gap? 6 October.
BURT, E. (2019) Many employers' gender pay gaps have widened – but is it their fault?People Management (online). 25 April.
FARAGHER, J. (2018) The gender pay gap – how to calculate it, explain it and eradicate it. People Management (online). 25 January.
MACLELLAN, G. and DOUGAN, V. (2018) Five ways to reduce your gender pay gap. People Management (online). 13 August.
WOLF, R. (2018) Tackling the gender pay gap means confronting the motherhood penalty. People Management (online). 13 December.
CIPD members can use our online journals to find articles from over 300 journal titles relevant to HR.
Members and People Management subscribers can see articles on the People Management website.
This factsheet was compiled by Sheila Wild with contributions from CIPD staff.
Sheila Wild: Freelance equalities adviser and writer
Sheila was for many years the Director of Employment Policy at both the Equal Opportunities Commission and the Equality and Human Rights Commission, where she led work on equal pay and the gender pay gap. For the past six years she has run EqualPayPortal, the independent website aimed at equipping people to understand and deal with equal pay issues. In 2017 she wrote the CIPD's guide on gender pay gap reporting, and is currently advising a number of clients on their gender pay gap reports.
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